REPORT 


OF  THE 


COMMITTEE  ON  THE  SINKING  FUND 


COMMUNICATED  TO  THE 


HOUSE  OF  REPRESENTATIVES,  FEBRUARY  12,  1840 


FRANKFORT,  KY. 
HODGES....STATE  PRINTER. 
1840. 


314. 


V 


T I.T,  I t>-Q  ’ 


REPORT,  &c. 


Mr.  J.  Speed  Smith,  from  the  committee  on  the  Sinking  Fund,  made  the 

following  report,  viz : 

The  Committee  on  the  Sinking  Fund,  to  whom  was  referred  so  much  of 
the  Governor’s  message  as  relates  to  that  subject,  together  with  the  report 
of  the  Commissioners  of  the  Sinking  Fund,  as  also  various  resolutions  of 
enquiry  adopted  by  the  House,  have  had  the  same  under  consideration,  and 
respectfully  ask  leave  to  make  the  following  report : 

The  committee  offer  to  the  House,  as  an  apology  for  the  late  period  of 
the  session  at  which  their  report  is  submitted,  the  delay  on  the  part  of  the 
Commissioners  of  the  Sinking  Fund,  in  making  their  annual  report.  This 
delay  was  in  consequence,  as  the  House  is  already  informed,  of  an  event  eis 
little  anticipated  by  the  Commissioners  as  the  public.  There  has  been  an 
additional  reason  operating  on  the  committee.  Fully  aware  of  the  distrust- 
ful character  of  the  public  mind  in  periods  of  embarrassment — the  more  es- 
pecially when  that  state  has  been  produced  by  revulsion  in  trade  or  de- 
rangement in  currency — the  committee  have  held  it  their  solemn  and  bound- 
en  duty  to  present  to  the  representatives  of  the  people  a full  and  fair  exhibi- 
tion of  that  Fund,  in  the  correct  and  faithful  and  successful  management  of 
which,  the  pledged  faith  of  Kentucky  is  inseparably  involved.  Thus  im- 
pressed, and  guided  by  the  sense  of  the  House,  as  indicated  by  the  adoption 
of  sundry  resolutions,  and  to  them  referred,  the  committee  have  felt  them- 
selves called  upon  to  give,  in  their  report,  a full  history  of  the  origin,  object 
and  constituent  elements  of  the  Sinking  Fund,  as  well  as  the  most  full  and 
ample  details  of  all  its  operations  from  the  moment  of  its  first  inception. 

Impelled  by  the  genius  of  the  age,  and  governed  by  a laudable  desire  to 
keep  position  with  her  sister  States,  Kentucky  determined  upon  the  estab- 
lishment and  prosecution  of  a system  of  Internal  Improvement.  This  sys- 
tem consisted  in  the  construction  of  turnpike  roads,  railroads,  and  slack- 
water  navigation,  but  mainly  of  the  first  and  last  classes  of  improvements. 
Whatever  might  be  the  ultimate  result,  (for  it  was  to  some  extent  a matter 
of  experiment,)  it  was  not  contemplated  by  the  Legislature  to  carry  the  sys- 
tem into  execution  by  direct  taxation.  The  plan  was  adopted,  of  obtaining 
upon  loan,  funds  sufficient  for  the  construction  of  the  works,  at  distant  time, 
giving  the  system  full  opportunity  to  develope  its  advantages  and  demonstrate 
its  worth.  There  existed  a well  founded  belief,  nor  have  sufficient  reasons 
occurred  to  impair  it,  that  the  works  themselves  would  greatly  aid  in  the 
payment  of  the  debts  incurred  for  their  construction,  should  they  fail  to 
J liquidate  the  whole  amount.  Hence  it  was  necessary  to  provide  only  the 

*.  means  sufficient  for  the  certain  and  punctual  payment  of  the  interest  to  ac- 

crue on  the  loans  which  might  be  effected,  at  the  times  and  places  agreed 
on.  To  this  end,  the  Sinking  Fund  was  created,  by  the  act  of  29th  Febru- 
ary, 1836,  which  declares  “that  for  the  purpose  of  carrying  on  a system  of 
Internal  Improvement  in  the  State,  and  providing  for  the  punctual  payment 


4 


of  the  interest  on  money  borrowed,  a Sinking  Fund  shall  be,  and  the  same 
is  hereby  established and  to  endow  it  with  capacity  to  attain  the  declared 
object  of  its  creation,  the  General  Assembly,  in  the  same  act,  set  apart  the 
following  means  belonging  to  the  State,  and  by  solemn  legislation  consecra- 
ted them  upon  the  altar  of  public  faith. 

Tax  on  capital  stock  in  the  Bank  of  Kentucky. 

Tax  on  capital  stock  in  the  Northern  Bank  of  Kentucky. 

Tax  on  capital  stock  in  Kentucky  Bank  of  Louisville. 

Excess  of  dividends  on  stocks  owned  by  the  State  in  those  Banks,  after 
paying  the  interest  on  the  State  bonds  sold  to  pay  for  said  stock. 

Premiums  on  sale  of  State  bonds  sold,  or  to  be  sold. 

Dividends  on  stock  of  the  State,  vested  in  turnpike  roads  and  bridges, 
made  or  to  be  made. 

Profits  which  may  accrue  on  works  of  Internal  Improvement,  made  or  to 
be  made  by  the  State. 

Excess  in  the  Treasury,  over  $10,000,  for  the  current  year,  after  defray- 
ing all  expenditures  and  appropriations. 

That  the  resources  thus  enumerated  as  the  elements  of  the  Sinking  Fund 
at  the  time  of  its  establishment  may  be  clearly  comprehended,  it  is  proper 
to  state  that  theretofore — 

The  Bank  of  Kentucky  had  been  created,  with  a capital  of  $5,000,000, 
three  millions  of  which  had  been  taken  by  individuals,  and  one  million  by 
the  State.  The  fifth  million  was  left  open,  to  be  taken  by  the  State,  in  the 
manner  prescribed  in  the  charter  of  said  Bank. 

The  Northern  Bank  of  Kentucky  had  been  created,  with  a capital  of 
$3,000,000,  two  millions  of  which  had  been  taken  by  individuals,  and  one 
million  by  the  State. 

The  State  had  subscribed  for  the  above  stated  amount  of  stock,  and  paid 
therefor  in  her  own  bonds,  bearing  an  interest  of  five  per  cent.  Hence  the 
■revenue  to  accrue  from  these  sources  to  the  Sinking  Fund,  depend  upon  the 
•excess  of  dividend  over  five  per  cent,  which  the  State  owes  on  her  bonds, 
executed  for  stock. 

The  resources  of  the  Sinking  Fund,  given  at  the  moment  of  its  creation, 
were  the  following : 

Tax  on  the  capital  stock  of  the  Bank  of  Kentucky,  Northern  Bank  of 
Kentucky,  and  the  Bank  of  Louisville,  payable  1st  July  in  each  year — cer- 
tain. 

Excess  of  dividends  on  State  stock  in  Banks,  as  above  stated  and  explain- 
ed, payable  1st  January  and  July  each  year — amount  of,  precarious. 

Premiums  on  sale  of  State  scrip — amount  of,  precarious. 

Dividends  of  State  stock  in  turnpike  roads  and  bridges,  payable  when  de- 
clared— amount  of,  precarious. 

Excess  of  dividend  on  State  stock  in  Bank  of  Kentucky,  after  paying  in- 
terest on  State  scrip  held  by  the  Bank,  is  directed  by  said  act  to  go  in  pur- 
chase of  the  fifth  million  of  the  capital  stock  of  said  Bank;  and  therefore,  at 
the  outset,  contributed  nothing  except  the  means  of  acquiring  a portion  of 
the  fifth  million,  to  be  thereafter  available. 

The  same  act  constituted  the  Governor  of  the  Commonwealth,  together 
with  the  Presidents  of  the  Bank  of  Kentucky,  the  Northern  Bank  of  Ken- 
tucky, and  the  Bank  of  Louisville,  Commissioners  of  the  said  Fund. 
They  were  charged  with  the  payment  of  the  interest  on  State  bonds  sold. 


and  to  be  sold,  for  works  of  internal  improvement;  and  were  also  required 
to  invest,  from  time  to  time,  surplus  money  belonging  to  said  fund,  in  safe 
and  profitable  stocks,  in  order  to  make  the  fund  productive  and  available 
Although  the  act  establishing  the  Sinking  Fund  passed  the  29ih  February, 
1836,  the  Commissioners  did  not  take  upon  themselves  the  duties  of  their 
office,  until  the  20th  of  the  following  October.  In  the  mean  time,  however, 
the  Treasurer  had  distinguished  between  ordinary  receipts  and  those  set 
apart  for  the  Sinking  Fund,  and  thus  rendered  available  to  the  fund,  all  the 
revenue  to  which  it  was  entitled  from  the  first  moment  of  being  brought 
into  existence. 

That  the  business  and  operations  of  the  Sinking  Fund  might  take  that 
clear  and  distinctive  character  which  was  obviously  designed,  the  Treasurer 
was  called  upon  to  pay  over  to  the  Commissioners,  all  moneys  due  the 
fund  ; which  he  did,  by  placing  in  their  hands  the  sum  of  $31,429  44,  which 
had  accumulated  in  the  Treasury,  over  and  above  the  amounts  paid  out,  for 
which  the  Sinking  Fund  had  been  made  responsible.  Thus  the  board  com- 
menced. The  precise  amount  of  burden  resting  upon  the  Sinking  Fund  at 
that  moment^  cannot  be  determined  ; nor  is  it  needful  that  it  should  be.  In 
February  following  their  organization,  the  Commissioners  make  their  first 
report,  and  shew  the  fiscal  condition  of  the  fund  to  be  as  follows : 

Cash  received  of  Treasurer  of  the  State,  in  his  hands  prior  to  the  organiza- 
tion of  the  Board  of  Commissioners,  ...  - $31,429  44 


Cash  received  since  organization  of  the  Board — 

Of  the  Shelby  turnpike  road,  . . . . . 

Of  the  Franklin  turnpike  road,  . . . . 

Of  the  Northern  Bank  of  Kentucky,  - - - - 

Of  the  Old  Bank  of  Kentucky,  - . . - 

Of  the  Maysville,  Washington,  Paris  and  Lexington 
turnpike  road, 


2,119  89 
700  00 
50,000  00 
5,967  00 

2,191  84 


Expenditures,  &c. — 

To  Prime,  Ward  & King, 

To  Bank  of  Kentucky, 

To  Northern  Bank  of  Kentucky,  - 
To  purchase  of  stock  (450  shares,) 
To  Northern  Bank  of  Kentucky, 


$92,408  17 


$2,525  50 
3,750  00 
2,500  00 
43,599  36 
25,000  00 

77,374  86 


Balance  on  hand,  . . - $15,033  31 


The  Legislature,  at  their  session  1836-’7,  had  passed  an  act,  appropria- 
ting to  the  Sinking  Fund,  the  interest  and  profits  accruing  from  the  Old 
Bank  of  Kentucky,  and  the  Commonwealth’s  Bank — hence  a slight  acces- 
sion of  resources.  Thus  it  will  be  perceived  that  within  the  year  after  its 
creation,  the  fund  not  only  discharged  all  the  interest  which  it  was  called 
upon  to  meet,  but  purchased  profitable  stock  to  a considerable  amount. 

Thus  stood  the  Sinking  Fund,  when,  by  the  law  of  Congress,  distributing 
the  surplus  revenue  of  the  United  States  amongst  the  several  States,  the 
sum  of  $1,433,757  38  was  received  into  the  Treasury  of  the  State.  Of  the 


6 


amount  thus  received,  the  Legislature  set  apart  and  dedicated  to  a general 
system  of  Public  Instruction,  the  sum  of  $850,159  02,  which,  under  the 
law,  was  paid  over  to  the  Commissioners  of  the  Sinking  Fund,  and  by  them 
invested,  as  follows : 

$500,000  in  5 per  cent,  internal  improvement  bonds,  dated  I5th  May, 
1837 ; due  15th  May,  1872 — 35  years  to  run. 

$170,000  in  similar  bonds,  dated  1st  July,  1837,  and  due  1st  July,  1872 — 
having  35  years  to  run. 

$180, 006  in  similar  bonds,  dated  1st  October,  1837,  due  1st  Oct’r,  1872 — 
having  35  years  to  run. 

The  fraction  of  $159  02  was  paid  over  to  the  Board  of  Education. 


With  a balance  on  hand,  of  $15,033  31  on  their  first  report,  we  find  the 
Commissioners,  by  the  accession  of  means  just  herein  before  stated,  at 
their  annual  meeting,  presenting  the  following  as  the  result  of  their 
fiscal  operations,  embracing  the  period  between  their  first  and  second 
report : 


Receipts — 

Balance  on  hand  per  last  report,  _ . - . 

From  Maysville,  &c.  turnpike  road,  . - - - 

From  Shelby  county  turnpike  road,  . - - - 

From  Northern  Bank  of  Kentucky,  - - - . 

From  Old  Bank  of  Kentucky,  .... 

From  Commonwealth’s  Bank,  .... 

From  surplus  revenue  of  the  United  States, 

From  Anderson  county  turnpike  road,  ... 
From  premiums  on  sale  of  bonds  to  Northern  Bank  of  Ky. 

From  Bank  of  Kentucky, 

From  Bank  of  Louisville,  ..... 

From  Muldrow’s  Hill  turnpike  road,  ... 

From  Springfield  and  Bardstown  turnpike  road, 


$15,033  31 
2,056  82 
910  38 
28,610  37 
5,967  00 
31,750  00 
850,159  02 
468  88 
7,500  00 
22,157  00 
5,750  00 
335  68 
220  37 


$970,912  83 


Disbursements — • 

Paid  interest  account,  ^ ^ . $12,422  50 

Paid  exchange  account,  - - _ - . . 217  10 

Paid  contingent  expenses, 567  61 

Paid  Bank  stock,  - 17,500  00 

Paid  Sinking  Fund,  (Internal  Improvement  bonds,)  - 20,000  00 

Paid  School  Fund,  (Internal  Improvement  bonds,)  - 850,000  00 

Paid  School  Fund,  (surplus  revenue  uninvested,)  - 159  02 

Paid  profits  School  Fund, 3,218  75 

Balance  remaining  on  hand,  Dec.  14,  1837,  - - 66,827  77 


$970,912  83 


The  sources  from  which  revenue  is  derived  to  the  Sinking  Fund,  are,  as 
to  several  of  them,  not  only  uncertain  and  precarious,  but  vary  in  their  an- 
nual yield.  Thus  it  will  be  seen  that  the  Bank  dividends  fluctuate — at  one 
time  promising  the  highest  prosperity;  at  the  next,  not  very  flattering — if 


not  gloomy,  at  least  dashing  the  hopes  previously  created.  The  Old  Bank 
of  Kentucky  and  the  Commonwealth’s  Bank,  also  vary  in  their  contribu- 
tions. Variations  in  these  resources  were  to  be  expected,  and  are  the  less 
to  be  regretted,  as,  from  their  very  character,  they  will  be  looked  to  as  con- 
tribut.ons  for  a very  few  years  more. 

The  foregoing  stated  account  exhibits  the  Sinking  Fund,  with  means  on 
hand,  to  enter  upon  the  year  1838.  The  following  statement  gives 
the  receipts  and  disbursements  of  the  fiscal  operations  of  the  fund  for 
that  year : 


Receipts — 

Balance  on  hand,  as  per  last  report, 

From  Commonwealth’s  Bank,  . . - 

From  Bank  of  Kentucky,  dividends. 

From  Bank  of  Kentucky,  bonus, 

From  Northern  Bank  of  Kentucky,  dividends. 
From  Northern  Bank  of  Kentucky,  tax. 

From  Bank  of  Louisville,  dividends. 

From  Bank  of  Louisville,  tax. 

From  premiums,  - _ - . - 

From  Penitentiary,  - - - - - 

From  Maysville,  &c.  turnpike  road. 

From  Muldrow’s  Hill  turnpike  road,  - - 


$66,827 

77 

27,200 

00 

37,255 

04 

23,213 

04 

26,500 

00 

13,754 

00 

1,400 

00 

5,750 

00 

30,875 

03 

5,000 

00 

4,690 

54 

350 

00 

$242,815  42 


Disbursements — === 

Paid  interest  account,  $25,750  00 

Paid  exchange  account,  - - - - - - 1,198  37 

Paid  contingent  account,  ------  837  50 

Paid  E.  1.  Winter,  1,275  00 

Paid  arbitrators, 150  00 

Paid  Board  of  Education, 19,570  00 

Paid  Bank  stock,  138,959  06 

Balance  remaining  on  hand, 55,075  49 


242,815  42 


Of  this  balance,  the  sum  of  $21,568  75  was  due  the  Board  of  Education, 
which,  deducted  from  the  $55,075  49,  left,  belonging  to  the  Sinking  Fund 
proper,  only  $33,506  74.  It  will  be  remarked  that  the  Sinking  Fund  has 
received  but  one  contribution  from  the  Penitentiary,  and  that,  from  the  ex- 
pense of  putting  up  two  hundred  and  fifty  new  cells,  all  aid  from  that  source 
(at  best  trifling  and  precarious,)  may  be  considered  as  diverted.  The  com- 
mittee cannot  permit  the  occasion  to  pass  without  taking  leave  to  express 
their  dissent,  in  the  most  decided  terms,  to  an  opinion  entertained  by  some, 
that  the  resources  of  the  Sinking  Fund  may  be  temporarily  suspended,  and 
even  diverted  to  objects  other  than  those  set  forth  in  the  act,  without  provid- 
ing a more  certain  and  ample  equivalent.  The  excess  over  $10,000  in  the 
current  year,  after  paying  the  appropriations  and  expenditures,  has  not  only 
proven  an  empty  sound,  but  will  continue  an  idle  repetition  and  incum- 
brance upon  the  record,  until  the  taxes  shall  be  increased. 


The  fiscal  year  commencing  December,  1838,  and  ending  13th  December, 
1839,  exhibits  the  following  receipts  and  disbursements : 

Cash  on  hand  at  date  of  last  report. 

Cash  rec’d  for  premium,  interest  and  exchange. 

From  the  Bank  of  the  Commonwealth, 

From  tolls  on  Maysville,  &c.  turnpike  road. 

From  Muldrow’s  Hill  turnpike. 

From  Springfield  and  Bardstown  turnpike  road. 

From  Franklin  county  turnpike  road. 

From  Frankfort  and  Georgetown  turnpike  road. 

From  Lincoln  county  turnpike  road. 

From  Franklin  and  Crab  Orchard  turnpike  road, 

From  Louisville  and  Elizabethtown  turnpike  road 
Amount  received  from  Old  Bank  of  Kentucky, 

Tax  or  bonus  on  stock  of  the  Bank  of  Kentucky, 

Amount  received  from  Northern  Bank  Kentucky 
Amount  received  from  the  Bank  of  Louisville, 

Amount  received  from  the  Bank  of  Kentucky, 
being  excess  of  dividend  on  stock  owned  by  the 
State,  after  paying  interest  on  her  bonds  held 
by  the  Bank,  ------ 

Do.  do.  of  Northern  Bank  of  Kentucky  do. 

Do.  do.  dividend  on  seven  thousand  shares  in 
the  name  of  the  State,  _ - - - 

Do.  do.  on  2,336  shares,  in  the  name  of  the 
Commissioners  of  the  Sinking  Fund, 

Do.  on  400  shares  do.  Northern  Bank, 

Do.  do.  on  175  do.  Bank  of  Louisville, 

Amount  received  of  the  Board  of  Education,  for 
so  much  advanced, 

$311,985  26 


$55,075 

49 

15,049 

15 

27,080 

00 

2,798 

25 

800 

57 

550 

00 

1,600 

00 

462 

00 

779 

55 

286 

00 

1,  300 

00 

5,967 

00 

23,491 

52 

14,903 

62 

5,750 

00 

35,000 

00 

42,500 

00 

59,500 

00 

14,690 

50 

3,700 

00 

1,400 

00 

301 

61 

The  following  sums,  during  the  same  period,  for  the  objects 
stated,  were  expended — 


Paid  to  Prime,  Ward  & King,  and  their  assignees, 
New  York,  for  the  interest  due  in  January  and 
July,  1839,  on  100,000  5 per  cent.  State  bonds. 
Paid  to  War  Department,  for  interest  on  $165,000 
at  five  per  cent.  - - ' - 

Paid  to  American  Life  Insurance  and  Trust  Com- 
pany, for  interest  on  $1,250,000  six  per  cent. 
State  Bonds,  ------ 

Paid  to  Bank  of  Kentucky,  for  interest  on  $150,- 
000,  at  five  per  cent.  - - - - 

Paid  to  Northern  Bank,  for  interest  on  100,000 
dollars  at  five  per  cent.  - - - - 


$5,000 

00 

8,250 

00 

56,250 

00 

7,500 

00 

5,000 

00 

Amounts  carried  forward. 


$82,000  00  $311,985  26 


9 


Amounts  brought  Ibyward, 

Paid  to  Board  of  Education,  as  interest  upon 
$850,000,  being  the  bonds  held  by  them  as  the 
School  Fund,  created  by  act  of  1836-7,  bear- 
ing five  per  cent,  interest,  . - - - 

Paid  Bank  of  Kentuckyj  bn  loan  made  to  Board 
of  Internal  Improvem^t  by  said  Bank,  prior 
to  30th  December,  1838,  _ . - - 

Paid  for  interest  to  the  Bank  of  Kentucky,  on  ad- 
vance made  to  the  Commissioners  of  the  Sink- 
ing Fund,  o $43,625,  from  18th  June  to  1st 

July,  1839,  . - - - 

Paid  as  premium  of  exchange,  at  14  per  cent,  on 
201,853  43,  on  New  York, 

Paid  as  premium  on  10,000,  at  1 per  cent. 

Paid  for  contingent  expenses  of  the  Board, 

Paid  959  shares  stock  of  Bank  of  Kentucky,  at  an 
average  cost  per  share^  of  $88  71|^|-|, 

Paid  for  163  shares,  at  $79  49 1 4 per  share, 
Exchange  paid  Board  of  Education,  on  $297  16, 
at  14  per  cent,  advanced  by  Board  of  Educa- 
tion, as  before  stated,  - - - 


$82,000 

00 

63,750 

00 

6*750 

00 

87 

25 

3,027 

79 

100 

00 

1*373 

18 

85,078 

95 

12,957 

64 

4 

45 

$311,985  26 


$255,129  26 


Which,  which  when  deducted  from  amount  of  receipts  prior 
to  13th  December,  1839,  leaves  a balance  of  - - $56,856  00 

That  the  committee  may,  as  far  as  their  time  will  allow,  report  fully  up 
to  the  meaning  and  spirit  of  the  resolutions  to  them  directed,  the  following 
balance  sheet  is  presented,  giving  at  one  entire  view,  the  whole  operations  of 
the  Board,  the  receipts  and  expenditures,  from  its  organization  up  to  the 
13th  December,  1839 : 


Receipts  and  Disbursements  of  the  Sinking  Fund  since  its  organization 

to  13^^  December i 1839. 

Receipts — 

From  the  Treasurer  of  the  State,  after  organiza 
the  Boai*d,  ------ 


dividends*  ------ 

From  Northern  Bank  of  Kentucky,  do.  do. 
From  Bank  of  Louisville,  bonus  and  dividends. 
From  Old  Bank  of  Kentucky, 

From  Commonwealth’s  Bank, 

From  turnpike  roads,  - - . - 

From  surplus  revenue  of  the  United  States, 
From  Penitentiary,  - - - - 

From  slackwater  navigation,  (Green  river,) 
From/premiums, 


- 

$33,249  3 

of 

215,301  10 

lo. 

176,767  99 

- 

20,575  00 

- 

17,901  00 

- 

88,030  00 

- 

21,311  47 

- 

850,159  02 

- 

5,000  00 

- 

307  08 

- 

53,424  18 

$1,482,026  17 

2 


10 


Disbursements — 

By  interest  on  loans, 

By  exchange,  - . _ _ 

By  contingent  expenses,  - - . 

By  Bank  stock,  _ - . . 

By  Internal  Improvement  bonds. 

By  fraction  of  surplus  revenue  paid  over 
Education,  . - . . 


Balance, 


- $289,832  25 

8,629  17 
4,268 

- 298,099  46 

- 870,000  00 
of 

159  02 


$1,470,988  69 
11,037  48 


$1,482,026  17 

Every  detail  connected  with,  and  illustrative  of,  this  general  and  condens- 
ed view  of  the  operations  and  doings  of  the  Board  of  Commissioners,  is  giv- 
en, with  great  precision  and  clearness,  by  the  Secretary  of  State,  who  is 
also  Treasurer  of  the  Sinking  Fund,  in  his  response  to  inquiries  made  by  the 
committee.  The  letter  of  the  chairman,  with  the  answer  of  the  Secretary, 
together  with  documents  accompanying  that  answer,  (marked  A,  B,  C,  D, 
E,  F,  G,  H,  I,  K,  L,  M,  S,)  are  herewith  presented,  and  incorporated  and 
made  part  of  this  report.  \ 


Frankfort,  Januark  24,  1840. 
Sir  : 1 

The  committee  on  the  Sinking  Fund,  desirous  of  presenting  (o  the  House 
the  amplest  information  upon  the  subject  confided  to  their  consideration,  re- 
quest you  to  give  them  a full,  explicit  and  complete  account  of  t|ie  manage- 
ment of  the  Fund,  from  the  first  moment  of  the  organization  of  the  Board  of 
Commissioners,  up  to  this  time. 

1st.  You  will  state  and  show  the  profit  which  has  accrued  to  the  State, 
upon  the  sale  of  scrip,  made  for  Internal  Improvements. 

2d.  You  will  state  and  show  the  profit  which  has  resulted  to  the  Sinking 
Fund,  upon  purchases  of  stock,  since  its  creation. 

3d.  You  will  give  the  amount  of  Bank  stock  purchased,  and  the  rates  be- 
low par. 

4th.  You  will  please 
Fund. 

Your  attention  is  called,  in  an  especial  manner,  to  the  following  resolu- 
tions offered  by  Mr.  Sprigg,  and  adopted  by  the  House  ; and  also  to  the  re- 
solution of  Mr.  Hopkins,  which  was  also  adopted. 


distinguish  the  amount  bought  on  account  of  School 


By  Mr.  Sprigg : 


Resolved^  That  the  committee  on  the  Sinking  Fund  make  their  report  to 
this  House,  setting  forth  therein,  the  several  sums  which  have  been  carried 
by  the  Treasurer  of  the  State  to  the  credit  of  the  Commissioners  of  that 
Fund  ; from  what  sources  of  revenue  such  sums  were  derived,  and  the  times 
when  received  into  the  Treasury ; and  the  committee  shall  state  the  time 
when  moneys  belonging  to  that  Fund  have  been  paid  out  to  said  C^ommis- 


11 


sioners,  or  upon  the  requisition  of  the  Governor  of  this  Commonwealth;  and 
the  several  sums  so  paid  out  by  the  Treasurer,  from  the  20th  of  October, 
1836,  up  to  this  time ; and  after  evisry  such  payment,  the  committee  shall 
set  forth  the  aggregate  sum  remaining  iii  the  Treasury,  belonging  to  that 
Fund. 

'Resolved  further^  That  the  committee  shall,  in  their  report,  set  forth  the 
times  when,  by  the  charters  of  the  Bank  of  Louisville,  the  Bank  of  Kentucky 
and  the  Northern  Bank  of  Kentucky,  semi-annual  dividends  on  their  stocks 
are  declared  ; and  shall  state  the  amount  of  stock  owned  by  the  State  or 
held  by  said  Commissioners,  at  the  several  successive  times  when  said  Banks 
have  declared  dividends  ; and  to  state  the  rate  per  centum  of  dividends  de- 
clared by  said  Banks  periodically,  according  to  their  charters ; and  to  state 
the  amount  of  money  to  which  the  State  was  entitled,  upon  the  stocks  so 
owned  by  her,  or  held  by  said  Commissioners,  at  the  several  times  of  de- 
claring dividends  by  said  Banks  respectively,  according  to  the  rates  per  cen- 
tum upon  which  dividends  were  so  declared;  and  to  state  the  amount  which 
said  Banks  severally  paid  into  the  Treasury  of  the  State,  as  her  portion  of 
the  dividends  so  declared;  and  the  times  when  such  payments  into  the  Trea- 
sury were  made  by  said  Banks  respectively,  since  the  29th  February,  1836, 
when  certain  revenues  of  the  State  were  set  apart  by  law  as  a Sinking 
Fund. 

Resolved  further,  That  said  committee  shall  state  the  aggregate  amount 
of  moneys  which,  by  law,  were  under  the  control  and  management  of  said 
Commissioners  from  their  first  organization,  and  on  every  day  thereafter, 
when,  by  the  duties  of  their  Commissions,  they  were  bound  to  pay  the  in- 
terest due  upon  the  bonds  of  the  State,  sold  for  works  of  internal  improve- 
ment ; and  to  exhibit  the  aggregate  surplus  of  money  to  which  they  were 
entitled  as  Commissioners  of  said  Fund,  after  discharging  the  interest  peri- 
odically due  upon  said  bonds ; and  to  exhibit  the  amount  and  description  of 
investments  made  by  them,  of  the  funds  under  their  control,  and  at  the  price 
at  which  all  stocks  Avere  purchased  by  them,  and  the  surplus  of  said  fund 
remaining  under  their  control  and  subject  to  their  demand,  after  every  such 
investment ; and  to  show  to  what  other  purposes  the  said  Fund,  so  subject 
to  their  control  and  command,  has  been  applied,  besides  paying  the  interest 
on  said  bonds  and  the  buying  of  the  stocks;  and  if  any  of  said  Fund  has  been 
applied  to  other  purposes  than  as  before  stated,  the  committee  shall  specially 
set  forth  for  what  other  purposes  said  Fund  has  been  applied,^  to  whom  ap- 
plied, and  the  amount  so  applied.  ^ 

Resolved,  That  the  committee  enquire  especially  into  the  amount  of  tax, 
and  of  dividends  on  stock,  which  the  Commissioners  of  the  Sinking  Fund 
have  received  from  the  Bank  of  Louisville,  since  their  organization  ; and  if 
they  have  not  received  the  full  amount  due  the  State  from  those  sources  of 
revenue,  the  committee  shall  ascertain  the  reasons  therefor,  and  make  their 
report  thereon.  \ 

By  Mr.  Hopkins  : 1 

Resolved,  That  His  Excellency  the  Lieutenant  and  Acting  Governor  be 
respectfully  requested  to  communicate  to  this  House,  the  amount  of  State 


12 


bonds  issued  and  sold  for  internal  improvement  purposes,  in  each  year  since 
the  commencement  of  the  system  ; stating,  also,  the  persons,  corporations 
and  companies  to  whom  the  whole  or  any  part  of  the  bonds  issued  in  each 
year  as  aforesaid,  were  sold,  and  when  the  payments  were  to  be  made,  un- 
der the  several  contracts  of  sale  ; also,  the  amount  received  under  each  con- 
tract of  sale,  and  when  the  said  last  mentioned  amounts  were  respectively 
paid ; also,  whether  any  part  of  the  purchase  money  for  said  bonds,  or  any 
part  thereof,  remains  unpaid,  and  if  so,  when  the  same  was  or  is  payable  or 
due,  and  who  is  the  debtor  ? also,  what  amount  of  State  bonds,  if  any,  have 
been  issued,  but  remain  unpaid,  and  the  year  in  which  said  unsold  bonds 
were  issued;  and  the  amount  of  money  now  due  from  the  State  to  the  Banks 
and  individuals,  for  money  borrowed  by  the  State,  for  which  no  bonds  have 
been  issued. 

This  resolution  of  Mr.  Hopkins,  though  not  directed  to  the  committee, 
contains  enquiries  for  information  -necessary  for  the  committee  to  receive 
and  embody  in  their  report ; and  is  therefore  substituted  by  the  committee 
as  their  own. 

Respectfully, 

J.  SPEED  SMITH, 
Chairman  Committee  on  Sinking  Fund, 

J.  M.  Bullock,  Esq., 

Secretary  of  State. 


Executive  Department, 

Frankfort,  January  30,  1840. 

To  the  Hon.  John  Speed  Smith, 

Chairman  of  the  Committee 

on  the  Sinking  Fund. 

Sir: 

I have  had  the  honor  of  receiving  your  polite  note  of  the  25th  instant, 
directing  my  attention  to  the  resolutions  introduced  by  Mr.  Sprigg,  and 
adopted  by  the  House  of  Representatives  on  the  11th  instant,  and  asking  a 
response  to  these  resolutions,  as  well  as  to  the  resolution  offered  by  Mr. 
Hopkins  on  the  same  day,  and  to  such  other  interrogatories  as  are  embraced 
in  your  note. 

In  the  following  account  current  of  the  Sinking  Fund,  commencing  with 
the  organization  of  the  Board  of  Commissioners  on  the  20th  October,  1836, 
down  to  the  present  period,  is  exhibited  in  detail  every  transaction  of  the 
Board,  showing  every  amount  received  and  from  what  source,  and  every 
amount  disbursed  and  for  what  purpose,  and  the  balances  upon  each  invest- 
ment in  stock  and  upon  each  payment  of  interest  upon  Internal  Improve- 
ment bonds,  as  required  by  the  resolutions: 


Debtor.  SINKING  FUND.  Creditor.' 


13 


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In  the  foregoing  account  current  there  is  embraced  several  items,  shotving 
the  purchase,  by  the  Commissioners,  of  gold  and  silver,  or  its  equivalent,  for 
the  purpose  of  paying  in  coin  the  semi-annual  interest  on  Internal  Improve- 
ment bonds,  due  in  New  York  during  the  suspension  of  specie  payments  by 
the  Banks;  and  although  this  fact  has  heretofore  received  the  approbation 
of  a former  committee  on  the  Sinking  Fund,  and  the  concurring  approval 
and  sanction  of  the  representatives  of  the  people,  I can  not  refrain  from 
again  noticing  it,  that  all  persons  interested,  either  at  home  or  abroad,  may 
be  fully  apprized  of  the  inviolable  and  sacred  character  in  which  Kentucky 
regards  her  solemn  obligations,  and  the  practical  construction  of  her  repre- 
sentatives of  that  feature  of  the  constitution  which  makes  gold  and  silver 
the  only  legal  tender. 

The  following  table  exhibits  the  time  of  the  declaration  and  rates  of  div- 
idends by  the  Bank  of  Kentucky  and  Northern  Bank  of  Kentucky  on  State 
stock,  and  the  excess  thereof,  after  paying  the  interest  on  the  State  stock 
bonds  held  by  said  Banks : 

(B.) 


Table  showing  the  time  of  the  declaration^  and  the  rates  of  dividend,  by  the 
Bank  of  Kentucky,  and  Northern  Bank  of  Kentucky,  on  State  stock,  and 
the  excess  thereof  after  paying  the  interest  on  the  State  stock  bonds  held 
by  said  Banks, 

1837. 

1st  Monday  in  January,  Dividend  on  10,000  shares  stock  in  Northern  Bank,  of  Kentucky,  five 
per  cent.  ....  ^50,000  00 

Interest  on  ^1,000,000,  5 per  cent,  bonds,  . 25,000  00 

$25,000  00 

Dividend  on  10,000  shares  stock  Bank  of  Kentucky  carried  to 
the  increase  of  State  Stock  in  5th  million. 

1st  Monday  July,  Dividend  on  10,000  shares  stock  Northern  Bank  of  Kentucky,  4 
per  cent.  .....  ^40,000  00 

Interest  on  $1,000,000  5 per  cent,  bonds,  • 25,000  00 

15,000  00 

Dividend  on  10,000  shares  stock  Bank  of  Kentucky,  carried  to  the 
increase  of  State  stock  in  5th  million. 

1838. 

Ist  Monday  January,  Dividend  on  10,000  shares  stock  Northern  Bank  of  Kentucky 
4 per  cent.  .....  $40,000  00 

Interest  on  $1,000,000  5 per  cent,  bonds,  • 25,000  00 

15,000  0« 

Dividend  on  10,000  shares  stock  Bank  of  Kentucky,  carried  to 
the  increase  of  State  stock  in  5th  million. 

1st  Monday  July,  Dividend  on  10,000  shares  stock  Northern  Bank  of  Kentucky 

per  cent,  ....  ^35,000  00 

Interest  on  $1,000,000  5 per  cent,  bonds,  • . 25,000  00 

10,000  00 

Dividend  on  10,000  shares  stock  Bank  Kentucky, 
and  6,740.44  shares  in  5th  million. 


16,640.44  do.  3i  percent.  • . $58,591  54 

Interest  on  $1,000,000  5 per  cent,  bonds,  . • 25,000  00 


1839. 

1st  Monday  January,  Dividend  on  10,000  shares  stock  Northern  Bank  of  Kentucky, 
4|  per  cent.  . . . ^ $47,500  00 

Interest  on  $1,000,000  5 per  cent,  bonds,  . 25,000  00 


$33,591  54 


22,500  00 


Amount  carried  forward^  ......  $121,091  54 


M 

Amount  brought  forward,  . . • > . - . . ^121,091  54 

Dividend  on  17,000  shares  of  slock  In  Bank  of  Kentucky  4i  per- 
cent. 

Interest  on  $1,000,000  5 per  cent,  bonds, 


$76,500  00 
25,000  00 

Ist  Monday  July,  Dividend  on  10,000  shares  stock  Northern  Bank  df  Kentucky  4i 
per  cent.  . . . , * $45,000  00 

Interest  on  $1,000,000  5 per  cent,  bonds,  . • 25,000  00 

Dividend  on  17,000  shares  stock  Bank  of  Ken  .4  per  cent. $68, 000  00 
Interest  on  $1,000,000  5 per  cent,  bonds,  • * 25,000  00 


1840. 

Isi  Monday  January,  Dividend  on  10,000  shares  stock  Northern  Bank  of  Kentucky 
4i  per  cent.  . » . . $45,000  00 

Interest  on  $1,000,000  5 per  cent,  bonds,  • 25,000  00 

Dividend  on  71,000  shares  stock  Bank  of  Kentucky  was  not  de- 
clared. 

Total  excess,  * 


51,500  00 

20,000  00 

43.000  00 

20.000  00 

$255,591  54 


The  following  table  shows  the  time  of  declaring  dividends  by  the  Banks, 
the  number  of  shares  owned  by  the  Commissioners  at  each  time,  rate  of 
dividends,  and  amount: 


(C.) 


Table  showing  the  time  of  declaring  dividends  by  the  Banks,  number  of 
shares  owned  by  the  Commissioners  at  each  time,  rate  of  dividend  and 
amount. 


1837. 


1st  Monday  in  July, 

Dividend  on  250  shares  stock  in  Bank  of  Kentucky  3^,  * 

$ 875  00 

Do. 

200 

do. 

Northern  Bank  of  Kentucky  4, 

800  00 

Do. 

175 

do. 

Bank  of  Louisville,  3) 

525  00 

And  received  12th  October,  \ 

1838. 

1st  Monday  January, 

Do. 

250 

do. 

Bank  of  Kentucky  4,  . 

Northern  Bank  of  Kentucky  4, 

1,000  00 

Do. 

200 

do. 

800  00 

Do. 

175 

do. 

B’k  of  Louisville  was  not  declared. 

1st  Monday  in  July, 

Do. 

761 

do. 

Bank  of  Kentucky  3i, 

2,663  50 

Do. 

200 

do. 

Northern  Bank  of  Kentucky  3i, 

700  00 

Do. 

175 

do. 

Bank  of  Louisville  5,  • 

875  00 

1839. 

1st  Monday  in  January,  Do. 

1,277 

do. 

Bank  of  Kentucky  44, 

5,746  50 

Do. 

400 

do. 

Northern  Bank  of  Kentucky  4|, 

1,900  00 
700  00 

Do. 

175 

do. 

Bank  of  Louisville  4,  • 

Ist  Monday  in  July, 

Do. 

2,236 

do. 

Bank  of  Kentucky  4,  • 

8,944  00 

Do. 

400 

do. 

Northern  Bank  of  Kentucky  44 

1,800  00 

Do. 

175 

do. 

Bank  of  Louisville  4,  • 

700  00 

1840. 

1st  Monday  in  January,  Do. 

2,399 

do. 

Bank  Kentucky  was  not  declared. 

Do. 

400 

do. 

Northern  Bank  of  Kentucky  44, 

1,800  00 

Do. 

175 

do. 

Bank  of  Louisville  3,  • 

525  00 

Total,  . . . $30,354  00 


The  two  following  tables  show  the  investments  in  Bank  stocks,  the  num- 
ber of  shares,  the  cost  thereof,  par  value,  and  profits  made  by  the  purchases, 
together  with  all  other  investments  made  by  the  Commissioners,  for  the 
Sinking  Fund,  since  its  organization: 


(D.) 


^Vahh  showing  investments  in  Bank  stock. 

1837. 

January  24,  250  shares  of  stock  in  Bank  of  Kentucky,  at  93  50  each,  $23,375  00 


Brokerage,  of  1 per  cent.,  • • . 58  44 

Exchange  on  $23,433  44,  1 per  cent,  • 234  33 

292  77 

200  shares  of  stock  in  Northern  Bank  - of. Kentucky  at 

$68  50  for  70  paid  in,  • • . • 13,700  00 

Brokerage  of  1 per  cent,  • • • « 34  25 

Paid  in  full  on  each  share  30,  • . . . 6,000  00 

Exchange  on  $19,734  25,  1 per  cent,  > • 197  34 


April  15,  50  shares  of  stock  in  Bank  of  Louisville,  par, 

1838. 

April  19,  100  shares  of  stock  in  Bank  of  Kentucky,  $81  00  • • 8,100  00 

May  25,  120  shares  of  stock  in  Bank  of  Kentucky,  93  00  • . 11,160  00 

May  26,  44  shares  of  stock  in  Bank  of  Kentucky,  93  00  • . 4,092  00 

May  26,  60  shares  of  stock  in  Bank  of  Kentucky,  93  50  • » 5,610  00 

May  29,  50  shares  of  stock  in  Bank  of  Kentucky,  93  50  • • 4,675  00 

May  29,  137  shares  of  stock  in  Bank  of  Kentucky,  93  50  • . 12,809  50 

Interest  on  $4,675  for  3 days,  • • • • • 2 34 

Brokerage  on  $46,446,  ^ of  1 per  cent,  • • . 116  12 

Exchange  on  $13,900,  2 per  cent,  ....  278  00 

Exchange  on  $24,475  97,  3 per  cent,  . • . 734  28 

Exchange  on  $8,086  15,  5 per  cent,  ....  404  30 

Deficit  in  transfer,  .......  20  00 


July  13,  75  shares  of  stock  in  Bank  of  Kentucky,  at  $90  . . 6,750  00 

Brokerage  of  1 per  cent,  • • • • . 16  87 


September  17,  50  shares  of  stock  in  Northern  Bank  of  Kentucky,  at  $84 

for  $85  paid  in,  ......  . 4,200  00 

Paid  in  full  on  each  share,  $15,  ....  750  00 

Interest  on  $750,  1st  July  to  date,  ....  9 37 


October  22,  150  shares  of  stock  of  Northern  Bank  of  Kentucky,  $80 

for  $85  paid  in,  - .....  . 12,075  00 

Paid  in  full  on  each  share,  $15,  ....  2,250  00 

Interest  on  $2,250, 1st  July  to  8th  November,  . . 48  00 

October  24,  150  shares  of  stock  in  Bank  of  Kentucky,  $87  00  * • 13,050  00 

October  30,  50  shares  of  stock  in  Bank  of  Kentucky,  88  00  • . 4,400  00 

October  30,  200  shares  of  stock  in  Bank  of  Kentucky,  88  50  • • 17,700  00 

November  10,  33  shares  of  stock  in  Bank  of  Kentucky,  88  75  . 2,928  75 

November  26,  8 shares  of  stock  in  Bank  of  Kentucky,  87  00  • • 696  00 

Brokerage  on  $50,849  75,  ^ of  1 per  cent,  . . 127  13 

Exchange  on  $45,298,  li  per  cent,  ....  679  47 


August  20, 163  shares  of  stock  in  Bank  of  Kentucky,  average  $79  49  31-65,  12,957  64 
Exchange  on  $297  16,  N.  Y.  li  . . • • 4 45 


Exchange  on  $68,603  43,  li  per  cent,  • • • 1,029  05 

Exchange  on  $10,000  ......  100  OC 


October  6,  subscribed  in  5th  million  of  the  capital  stock  of  Bank  of 
Kentucky,  ........ 


$23,667  77 


19,931  59 
12,500  00 
5,000  00 


48,001  54 


6,766  87 


4,959  37 


53,954  35 
85,078  95 


12,962  09 

x,12G 

273,951  58 
25,956  40 
$299,907  98 


4 


26 


Table  showing  the  purchase  of  stock  in  the  Banks  of  Kentucky^  the  number 
of  shares,  their  cost,  par  value  and  profit,  and  all  other  investments  made 
by  the  Board  since  its  organization: 


Profit, 
j^23,448  42 


No.  Shares.  Cost.  Par  Value. 

2,974,  $273,951  58,  $297,400  00 

Subscribed  in  5th  million.  Bank  Kentucky,  . 25,956  40 

Invested  in  5 per  cent.  Internal  Improvement  Bonds,  20,000  00 

Total  investments,  ....  $343,356  40 

The  next  table  exhibits  the  investments  made  by  the  Commissioners  in 
Kentucky  Internal  Improvement  bonds,  both  for  the  Sinking  Fund  and  Com- 
mon School  Fund : 

(E.) 

Table  showing  investments  in  Kentucky  Internal  Improvement  Bonds  by  the 
Commissioners  of  the  Sinking  Fund. 

1837. 

May  15,  $500,000  5 per  cent,  bonds,  par,  .... 

July  1,  170,000  5 per  cent,  bonds,  par,  • . 

October  1,  200,000  5 per  cent,  bonds,  par,  .... 


Of  which  is  transferred  by  the  Commissioners  to  the  Board  of  Education, 
Leaving  amount  held  by  the  Commissioners  of  the  Sinking  Fund,  • 


$500,000  00 

170.000  00 

200.000  00 

$870,000  00 
850,000  00 

$20,000  00 


The  following  table  exhibits  the  amount  of  bonus  and  dividends  paid  by 
the  Bank  of  Louisville,  and  when  paid: 

(F.) 

Bank  of  Louisville  in  account  with  the  Commissioners  of  the  Sinking  Fund. 

Debtor. 


1837. 

July  15,  To  Bonus  on  capital  stock,  .... 

Dividend  on  175  shares  stock,  3 per  cent.,  received  12th  Oct 


1838. 

July 

1839. 

January  15, 
July  2, 

1840. 
January  6, 


Bonus  on  capital  stock,  • 

Dividend  on  175  shares,  5 per  cent. 

Dividend  on  175  shares,  4 per  cent. 
Bonus  on  capital  stock,  . 

Dividend  on  175  shares,  4 percent. 

Dividend  on  175  shares,  3 per  cent. 


, 1838, 


$5,750 

00 

525 

00 

5,750 

00 

875 

00 

700 

00 

5,750 

00 

700 

00 

1 to 

1 ^ 

00 

$20,575 

llsl 

1837. 

January  15,  By  Bonus, 
" 1838.  • 

July  1, 

October  12. 


Dividend, 

Bonus, 

Dividend, 


Amount  earried  forward, 


Credit. 


$5,750  00 

875  00 
5,750  00 
525  00 

$12,900  00 


27 


Amount  brought 

1839. 

January  15,  Dividend, 

November  11,  Bonus, 
July  2,  Dividend, 

1840. 


January  6,  Dividend, 


forward. 


• $12,900  00 

700  00 
5,750  00 
700  00 

525  00 


$20,575  00 


The  following  table  shows  the  aggregate  amount  received  into  the  Sink- 
ing Fund  since  its  organization,  and  the  sources  from  whence  received,  the 
amounts  expended,  and  for  what  expended,  and  the  balance  remaining  on 
hand: 


(G.)  • 

A table  showing  the  aggregate  amount  received  into  the  Sinking  Fund  since 
its  organization^  and  the  sources  from  whence  received — the  amounts  ex- 
pended, and  for  what  expended. 


Aggregate  amount  received,  .... 

Sources  from  whence  received,  to  wit: 

From  James  Davidson,  upon  settlement  after  organization  of  Board  20th  October, 


$1,482,026  17 


1836, 

Turnpike  roads  and  slack  water  navigation, 

Old  Bank  of  Kentucky,  profits, 

Commonwealth’s  Bank,  do. 

Bank  of  Kentucky,  bonus  and  dividends. 

Northern  Bank  of  Kentucky,  bonus  and  dividends, 

Bank  of  Louisville,  do.  do. 

Surplus  Revenue  United  States, 

Penitentiary,  profits. 

Premium  obtained  by  J.  M.  Bullock  on  negotiatiation  of  sale  of 
$1,250,000  of  scrip. 

Premium  from  all  other  sources. 


$33,249  33 
21,618  55 
17,901  00 
88,030  00 
215,301  10 
176,767  99 
20,575  00 
850,159  02 
5,000  00 

44,609  50 
8,814  68 

1,483,026  17 


Amounts  expended,  and  for  what  expended,  to  wit: 

By  aggregate  amount  of  interest  paid  on  Internal  Improvement  bonds,  and  expenses, 
such  as  exchange,  &c. 

Investment  for  School  Fund  in  Internal  Improvement  Bonds, 

Fraction  of  surplus  revenue  U.  States  paid  Board  of  Education, 

Additional  of  1 per  cent,  paid  E.  I,  Winter,  as  commission  for 
sale  of  State  Bonds,  on  $510,000,  . 

Aggregate  amount  invested  in  Bank  stock. 

Subscribed  in  5th  million  in  Bank  of  Kentucky, 

Contingent  expenses,  . . . t . 

Investment  in  5 per  cent.  Internal  Improvement  Bonds,  . 


$296,657 

40 

850,000 

00 

159 

02 

1,275 

00 

273,951 

58 

25,956 

40 

2,989 

29 

20,000 

00 

1,470, 


Balance  on  hand. 


$11,037  48 


The  two  following  tables  exhibit  the  entire  sales  of  Internal  Improvement 
bonds,  and  State  scrip  issued  in  payment  of  stock  in  the  Bank  of  Kentucky 
and  Northern  Bank  of  Kentucky,  the  par  value,  and  net  proceeds  and  pro- 
fits of  the  sales: 


2S 


(H.) 


TabU  showing  sales  of  Internal  Improvement  Bonds. 


1835. 


May  25,  $100,000  5 per  cent,  bonds  to  the  Bank  of  Kentucky,  at  par,  - 
August  1,  $100,000  5 per  cent,  bonds  to  Prime  Ward  & King,  by  E 
I.  Winter,  .... 

At  a premium  of  3.10  per  cent, 

2 days  interest,  .... 

Exchange,  ..... 


$100,000  00 


$100,000  00 
.3,100  00 
27  39 
207  50 


i of  1 per  cent,  commission  to  agent  on 
$103,127  39,  . . » 

Expenses  of  advertising  and  numbering  bonds. 


103,334  89 


$515  63 
111  76 


627  39 


1836. 


April  25,  100,000  dolls.  5 per  cent,  bonds  to  the  Northern  Bank  of  Kentucky,  at  par, 
June  1,  50,000  dolls.  5 per  cent,  bonds  to  the  Bank  of  Kentucky,  at  par, 

1837. 

April  1,  165,000  dolls.  5 per  cent,  bonds  to  War  Department  by  John 
Tilford,  ...... 

At  $98  for  100,  . • • • 3,300 

i per  cent,  commission  to  agent,  . • 825 


102,707  50 
100,000  00 
50,000  00 


165,000  00 


4,125  00 


Exchange,  I per  cent,  on  $125,440, 


160,875  00 
1,254  40 


162,129  40 

500.000  00 

170.000  00 


200,000  00 


May  15,  500,000  dolls.  5 per  cent,  bonds  to  Commissioners  of  the  Sinking  Fund,  at  par, 

July  1,  170,000  dolls.  5 per  cent,  bonds  to  Commissioners  of  the  Sinking  Fund,  at  par, 

October  1,  200,000  dolls.  5 per  cent,  bonds  to  the  Commissioners  of  the  Sinking  Fund, 
at  par,  ........ 

1838. 

July  1,  1,250,000  dolls.  6 per  cent,  bonds  to  the  American  Life  Insurance  and  Trust 
Company,  N.  Y.  by  J.  M.  Bulbck,  • 1,250,000  00 

Premium  of  sale,  exchange  and  interest  realized 

upon  the  negotiation,  . . • 44,609  50 

Expenses  of  Negotiation,  . . ■ 1,508  13 

1,290,101  37 

October  1,  21,500  dolls.  6 per  cent,  bonds  to  Board  of  Education,  at  par,  21,500  00 

1840. 

January  1,  22,000  dolls.  6 percent,  bonds  to  Board  of  Education,  at  par,  22,000  00 

January  1,  18,000  dolls.  6 per  cent,  bonds  to  Contractors  on  Turnpike 

Roads,  at  par,  ....  . 18,000  00 

January,  1,  1,000  dolls.  6 percent,  bond  to  J.  Swigert,  at  par,  ► 1,000  00 


$2,737,438  27 


(I-) 


Table  showing  State  Scrip  issued  in  payment  of  stock  in  the  Bank  of  Ken- 
tucky and  Northern  Bank  of  Kentucky, 

Amount  from  table  of  sales  Internal  Improvement  bonds. 


1835. 


$2,737,438  27 


April  18,  500,000  dolls.  5 per  cent,  scrip  to  the  Bank  of  Kentucky,  par, 

July  1,  500,000  dolls.  5 per  cent,  scrip  to  the  Bank  of  Kentucky  par, 
September  15,  500,000  dolls.  5 per  cent,  scrip  to  the  Northern  Bank  of  Ken- 
tucky, .....  500,000  00 

At  2 per  cent,  premium,  . • . 10,000  00 


500,000  00 
500,000  00 


J of  1 per  cent,  commission  toE.  I.  Winter, 


510,000  00 
2,550  00 


507,450  00 


Amount  carried  forward. 


$4,244,888  27 


29 


Amount  biought  forward,  .....  $4,244,888  27 

1836. 

July  1,  500,000  dolls.  5 percent,  scrip  to  the  Northern  Bank 

of  Kentucky,  ....  .500,000  00 

Premium  li  per  cent,  • • • 7,500  00 

507,500  00 


Net  proceeds  of  sales  of  bonds  and  scrip,  • • • 4,752,388  27 

Par  value  of  bonds  and  scrip,  .....  4,697,500  00 

Net  profit,  .......  $54,888  27 

The  first  Internal  Improvement  bonds  ever  issued  by  Kentucky,  were 
issued  under  Lieutenant  and  Acting  Governor  Morehead,  who  sold  $350,- 
000  thereof,  and  the  Auditor  of  Public  Accounts,  on  the  8th  June,  1835,  is- 
sued a quietus  for  $100,000,  and  on  the  11th  August,  1835,  for  $103,000, 
and  on  the  25th  August,  for  $207  50,  exchange  received  on  $83,000  eastern 
funds,  which  quietuses  are  on  file  in  the  office  of  the  Secretary  of  State.  For 
the  evidence  of  the  payment  into  the  Treasury  of  the  $100,000  sold  to  the 
Northern  Bank  of  Kentucky,  and  for  the  $50,000  sold  to  the  Bank  of  Ken- 
tucky— see  Auditor’s  Report,  Journal  of  the  Senate  1836-7,  page  49. 

All  moneys  received  from  sales  of  Internal  Improvement  bonds  by  the 
late  Governor  Clark  and  Lieutenant  and  Acting  Governor  WicklifFe,  are 
embraced,  also,  in  the  foregoing  table,  showing  the  sales  of  Internal  Im- 
provement bonds;  and  the  Auditor  of  Public  Accounts  has  issued,  at  the  ap- 
propriate times,  as  hereinafter  stated,  quietuses  for  the  following  sums,  to-wit; 
on  the  18th  April,  1837,  for  $126,694  40;  on  the  22d  June,  1837,  for  $36,- 
062  20 — these  two  quietuses  are  for  the  sums  received  for  the  $165,000  of 
bonds  sold  to  the  War  Department.  On  the  9th  June,  1837,  for  $500,000; 
on  the  20th  July,  1837,  for  $170,000;  on  the  2d  October,  1837,  for  $200,- 
000 — these  three  quietuses  are  the  sums  received  for  the  three  sales  made  to 
the  Commissioners  of  the  Sinking  Fund.  On  the  6th  July,  1838,  for  $150,- 
000;  on  the  16th  August,  1838,  for  $100,000;  on  the  14th  September,  1838, 
for  $100,000;  on  the  22d  September,  1838,  for  50,000;  on  the  11th  October, 

1838,  for  $146,091  87 ; on  the  5th  December,  1838,  for  $100,000  ; on  the 
31st  December,  1838,  for  $100,000 ; on  the  31st  January,  1839,  for  $30,- 
000;  on  the  12th  February,  1839,  for  $30,000;  on  the  25th  February,  1839, 
for  $30,000;  on  the  12th  April,  1839,  for  $60,000;  on  the  19th  April,  1839, 
for  $261,999  59;  on  the  29th  April,  1839,  for  $50,000  ; on  the  11th  May, 

1839,  for  $41,908  54 — these  fourteen  quietuses  are  for  the  $1,250,000 
received  from  the  sale  of  bonds  made  to  the  American  Life  Insurance 
and  Trust  Company.  On  the  1st  October,  1839,  for  $21,500 ; on  the 
6th  January,  1840,  for  $22,000 — these  two  quietuses  are  for  the  sums 
received  from  two  sales  made  to  the  Board  of  Education.  On  16th  Jan- 
uary, 1840,  for  18,000 — this  quietus  is  for  the  sale  made  to  contrac- 
tors on  turnpike  roads.  On  the  17th  January,  1840,  for  $1,002  83 — this 
quietus  is  for  a bond  sold  to  Jacob  Swigert,  Esq.,  and  the  interest  that  had 
accrued  thereon  from  1st  January,  1840.  All  of  these  quietuses  are  on  file 
in  the  office  of  the  Secretary  of  State. 

By  reference  to  the  above  table  it  will  be  seen  that  the  sale  of  $1,250,000 
of  bonds  was  negociated  by  the  agent  at  a premium  of  one  per  cent.,  and 
which  premium,  by  his  subsequent  negotiations  with  the  Bank  of  the  Uni- 
ted States  and  Bank  of  Kentucky  and  Northern  Bank  of  Kentucky,  he  in- 
creased to  the  aggregate  sum  of  $44,609  50,  all  of  which,  by  the  provisions 


30 


of  existing  laws,  passed  into  the  Sinking  Fund.  It  is  proper  here  to  state 
that  the  quietuses  of  the  Auditor  for  the  payment  into  the  Treasury  of  the 
$1,250,000,  have  issued  for  $3,908  13  more  than  was  paid  into  the  Treasu- 
ry, and  for  which  sum  the  Treasurer  should  have  credit  on  his  books.*  Of 
the  sum  above  mentioned  there  was  used  in  defraying  the  expenses  of  the 
agent,  printing  and  numbering  the  bonds,  employing  a young  man,  worthy 
of  such  confidence,  to  bear  them  to  Kentucky  and  back  again  to  New  York, 
for  the  signature  of  the  Governor  and  seal  of  State,  $908  13,  the  balance  of 
the  sum,  $3,000,  was  allowed  and  paid  by  the  Governor  to  the  agent  for 
effecting  the  negotiations;  this  sum  is  greatly  less  than  the  usual  allowance 
made  to  agents  who  sell  State  scrip;  one  half  of  one  per  cent,  was  paid 
both  to  Jno.  Tilford  and  E.  I.  Winter,  Esqrs.  for  the  sales  made  by  them  for 
the  State,  at  which  rate  the  agent  making  the  sale  to  the  American  Life  In- 
surance and  Trust  Company,  would  have  received  the  sum  of  $6,473,  but 
in  consequence  of  the  relative  position  in  which  the  agent  stood,  both  to  the 
Governor  and  the  Commonwealth,  only  the  sum,  as  above  stated,  was  re- 
ceived for  effecting  a negotiation  by  which  there  was  realized  to  the  State 
a net  profit,  over  and  above  all  expenses  and  the  nominal  amount  of  the 
bonds  sold,  the  sum  of  $40,101  37,  exclusive  of  interest  on  advance  of 
$250,000  obtained  by  the  contract  as  hereinafter  stated,  some  time  previous 
to  the  period  from  which  the  interest  on  the  bonds  sold  was  to  be  computed. 


The  following  table  shows  the  receipts  and  disbursements  of  that  portion 
of  the  Surplus  Revenue  of  the  United  States  that  came  into  the  Sinking 
Fund,  and  the  succeeding  one  exhibits  the  receipt  and  disbursements  of  the 
entire  amount  of  the  Surplus  Revenue  of  the  United  States  deposited  with 
the  State  of  Kentucky: 


(K.) 


Table  showing  receipts  and  disbursements  of  the  Surplus  Revenue. 


1837.  RECEIPTS. 

May  8th,  Surplus  revenue  United  States  rejected  by  the  Bank  of  Louisville, 

June  7,  do.  do.  do.  Northern  Bank  of  Kentucky,  • 

July  15,  do.  do.  do.  Northern  Bank  of  Kentucky,  . 


DISBURSEMENTS. 

1837. 

May  15,  $500,000  5 per  cent.  Internal  Improvement  Bonds  at  par,  $500,000  00 
July  1,  170,000  5 per  cent.  do.  do.  do.  170,000  00 

October  1, 180,000  5 per  cent.  do.  do.  do.  180,000  00 

1838. 

March  12,  Fraction  of  surplus  revenue  uninvested,  paid  over  to  the 

Board  of  Education,  .....  159  02 


$500,000  00 
170,939  35 
179,219  67 


$850,159  02 


850,159  02 


♦Note. — That  portion  of  the  funds  arising  from  the  sale  of  $1,250,000  of  bonds  for  which  there 
existed  no  immediate  demand,  was,  by  contract,  deposited  with  the  Banks  upon  an  interest  of  six 
per  centum  per  annum,  and  was  only  drawn  out  and  paid  into  the  Treasury  as  funds  were  needed 
by  the  Board  of  Internal  Improvement.  During  my  absence  eastward  the  last  amount  and  balance 
of  the  $1,250,000  remaining  on  deposit  with  the  Banks  was  required  by  the  Board  of  Internal  Im- 
provement from  the  late  Governor  Clark,  and  he,  at  the  time  being  exceedingly  indisposed  and  in 
very  precarious  health,  made  his  requisition  for  a greater  sum  than  stood  to  his  credit  on  the  books 
of  the  Banks,  and  thus,  as  I am  informed,  the  mistake  occurred. 


31 


(L.) 


Table  showing  receipts  and  disbursements  of  the  Surplus  Revenue. 

RECEIPT. 

Total  amount  of  the  surplus  revenue  of  the  U.  S.  deposited  with  the  State  of  Ken . $1,433,757  38 

DISBURSEMENTS. 


Invested  by  the  Commissioners  of  the  Sinking  Fund  in  5 per  cent.  Internal  Improve- 
ment bonds  for  the  benefit  of  Common  Schools,  • . $850,000  00 

Paid  over  to  Board  of  Education,  fraction,  ....  159  02  ^ 

Invested  in  5th  million  of  the  capital  stock  of  the  Bank  of  Kentucky,  583,598  36 

1,433,757  38 


The  following  table  exhibits  the  Internal  Improvement  bonds  and  Bank 
stock  purchased  for  and  held  by  the  Board  of  Education : 


(M.) 


Stocks  purchased  and  held  By  the  Board  of 

1837,  5 per  cent.  Internal  Improvement  Bonds, 

1839,  735  shares  of  stock  in  the  Bank  of  Kentucky, 

“ 6 per  cent.  Internal  Improvement  Bonds, 

1840,  6 per  cent.  Internal  Improvement  Bonds, 


Education. 

. $850,000  00 

. 73,500  00 

. 21,500  00 

. 22,000  00 


Total  par  value. 


. $967,000  00 


The  following  table  shows  the  total  aggregate  receipts  and  disbursements 
of  the  Sinking  Fund,  since  its  organization. 


(S.) 


Table  showing  the  receipts  and  disbursements  of  the  Sinking  Fundf  since 

its  organization. 


RECEIPTS. 

From  the  Treasurer  of  the  State,  after  organization  of  the  Board, 

From  Bank  Kentucky,  bonus,  dividends,  and  excess  of  dividend, 

From  Northern  Bank  Kentucky,  bonus,  dividends,  and  excess  of  dividends. 
From  Bank  of  Louisville,  bonus  and  dividends. 

From  Old  Bank  of  Kentucky,  .... 

From  Commonwealth’s  Bank,  .... 

From  turnpike  roads,  ..... 

From  surplus  revenue  of  the  United  States, 

From  Penitentiary,  ..... 

From  slackwater  navigation,  (Green  river,) 

From  premiums,  ..... 

Total  receipts,  . . . . . 


• $33,249 

33 

215,301 

10 

176,767 

99 

20,575 

oa 

17,901 

00 

88,030 

oa 

21,311 

47 

850,159 

02 

5,000 

oa 

307 

08; 

53,424 

18 

00 

1 o 

17 

DISBURSEMENTS. 

By  interest  on  loans,  .......  289,832  25 

By  Exchange,  .......  8,629  17 

By  contingent  expenses,  .......  4,268  79 

By  Bank  stock,  .......  298,099  46 

By  internal  improvement  bonds,  ......  870,000  00 

By  fraction  of  surplus  revenue  paid  over  to  Board  Education,  . • • 159  02 


1,470,988  69 

Balance,  ......  11,037  48 

$1,482,026  H7 

"-r 


V 


32 


Most  of  the  information  asked  for  by  the  resolution  of  Mr.  Hopkins  will 
be  found  embodied  in  the  preceding  part  of  this  communication,  and  in  for- 
mer reports  made  by  the  Commissioners  of  the  Sinking  Fund  to  the  Legis- 
lature; there  are  some  of  the  interrogatories,  however,  that  have  not  been 
answered — the  answers  to  which  are  as  follows:  The  following  payments  for 
Internal  Improvement  bonds  sold,  were  made  in  Kentucky,  $100,000  by  the 
Bank  of  Kentucky  on  the  8th  day  of  June,  1835;  $100,000  by  the  North- 
ern Bank  of  Kentucky,  on  the  4th  May,  1836;  $50,000  by  the  Bank  of 
Kentucky,  on  the  1st  June,  1836;  $500,000  by  the  Commissioners  of  the 
Sinking  Fund,  on  the  9th  June,  1837;  $170,000  by  the  Commissioners  of 
the  Sinking  Fund,  on  the  20th  July,  1837;  $200,000  by  the  Commissioners 
of  the  Sinking  Fund,  on  the  2d  October,  1837;  $21,500  by  the  Board  of 
Education,  on  the  1st  October,  1839:  $22,000  by  the  Board  of  Education, 
6th  January,  1840;  $18,000  by  Contractors  on  Turnpike  Roads,  on  the  16th 
January,  1840;  $1,002  83  by  Jacob  Swigert,  on  the  17th  January,  1840. 
The  payments  on  the  sale  made  to  the  War  Department  were,  by  the  con- 
tract, to  have  been  made  in  New  York,  and  on  the  18th  April,  1837,  $125,- 
440  was  paid  agreeable  to  contract,  but  the  Department  failed  to  comply 
further  with  the  contract,  and  the  residue,  $36,260,  was,  on  the  22d  June, 
1837,  received  in  Kentucky.  The  payments  made  for  the  $1,250,000  of 
bonds  sold  to  the  American  Life  Insurance  and  Trust  Company,  were  made 
in  New  York,  as  follows:  $150,000  on  the  1st  June,  1838,  one  month  in  ad- 
vance of  the  date  of  the  bonds;  $100,000  on  the  18th  June,  twelve  days 
prior  to  the  date  of  the  bonds;  $100,000  on  the  1st  August;  $100,000  on 
the  1st  September;  $200,000  on  the  15th  September;  $100,000  on  the  1st 
October;  $100,000  on  the  15th  October;  $100,000  on  the  15th  November; 
$100,000  on 'the  15th  December;  $100,0(B  on  the  1st  January,  1839,  and 
$100,000  on  the  1st  February,  1839.  The  payments  on  the  sale  made  of 
$100,000  to  Prime  Ward  & King,  were  made  in  New  York  on  the  1st  and 
3d  of  August,  1835. 

No  part  of  the  purchase  money  for  any  of  the  Internal  Improvement 
bonds,  sold,  remains  unpaid.  A contract  of  sale  of  $415,000,  in  1837,  was 
made  with  the  War  Department,  $250,000  of  which  the  Department  has 
failed  to  consummate ; no  bonds,  however,  have  been  issued  by  Kentucky  un- 
der this  contract,  except  for  the  $165,000,  for  which  payment  has  been  made. 

In  1839,  his  Excellency,  Governor  Clark,  signed  a number  of  bonds  for 
sterling  and  federal  money,  a portion  of  which  have  been  completed  by  the 
attestation  of  the  Secretary  of  State,  and  his  signature  to  the  coupons;  none 
of  them  have  been  sold;  they  were  all  carefully  counted  and  sealed  up  in  a 
strong  box  and  deposited  for  safe-keeping  in  the  Merchants’  Bank  in  the 
city  of  New  York,  and  a receipt  of  deposit  setting  forth  the  kind,  denom- 
ination and  number  of  the  bonds  is  on  file  in  the  office  of  the  Secretary  of 
State — $200,000  of  which  the  agent  brought  back  with  him  to  Kentucky, 
and  deposited  them  in  the  office  of  the  Secretary  of  State.  Some  sales,  as 
will  be  seen  by  reference  to  the  proper  table  contained  in  this  letter,  have  since 
been  made,  and  those  bonds  being  signed  by  the  late  Governor  Clark,  it 
was  thought  most  advisable  that  they  should  not  be  used ; others,  therefore, 
were  prepared,  all  of  which,  except  those  signed  and  sold  by  Lieutenant 
and  Acting  Governor  Wickliffe,  are  deposited  in  the  Executive  Office. 

The  amount  of  money  now  due  from  the  State  to  the  Banks  for  money 
borrowed  by  the  Board  of  Internal  Improvement,  is  $445,000,  for  which  no 
State  bonds  have  been  issued. 


33 


No  money  is  due  from  the  State  for  borrowed  money  for  which  bonce 
have  not  been  issued,  either  to  individuals  or  Banks. 

In  thus  responding  to  the  interrogatories  contained  in  your  letter  and  the 
resolutions  referred  to  your  committee,  you  will  discover,  sir,  that  there  has 
been  embodied  in  this  communication  a full,  varied  and  minute  exhibition  of 
all  the  transactions  of  the  Board  of  Commissioners  of  the  Sinking  Fund 
since  its  organization,  in  relation  to  every  particular,  whether  directly  or  re- 
motely connected  with  the  Fund. 

Respectfully,  your  obedient  servant, 

J.  M.  BULLOCK. 


These  documents  give  a precise  history,  in  detail,  of  every* act  of  the 
Board,  and  many  of  the  reasons  adopted  by  the  Board  for  conclusions  to 
which  it  came.  The  committee  feel  assured  that  they  could  not,  in  any  oth- 
er manner  so  ample  and  clear,  give  to  the  House  information  sought  by  the 
resolutions  adopted. 

The  Legislature  of  Kentucky,  fully  alive  to  the  high  tendencies  and  beni- 
ficent  results  of  a system  of  general  education,  if  carried  into  execution,  es- 
pecially in  a government  like  ours,  set  apart  a large  portion  of  the  surplus 
revenue  of  the  United  States  received  by  this  State,  to  constitute  a School 
Fund.  This  sum,  when  set  apart  in  round  numbers,  amounted  to  $850,000. 
The  system  of  common  schools,  which  it  was  intended  the  interest  of  this 
fund  should  aid  to  uphold,  has  found,  so  far,  but  little  favor  with  the  public. 
Hence  the  principal  business  performed  by  that  fund  has  been  to  accumulate 
and  invest.  It  now  stands  $917,000  of  productive  capital,  and  will  produce 
during  the  current  year,  something  like  $51,666  65 — fifty  thousand  dollars 
of  which,  at  least,  judging  from  the  past,  will  stand  ready  for  re-investment. 

The  residue  of  the  surplus  revenue  of  the  United  States  received  by  Ken- 
tucky (being  $583,598  36,)  was  paid  for  shares  subscribed  in  the  fifth  million 
of  stock  in  the  Bank  of  Kentucky.  The  profits  of  this  stock,  with  all  accu- 
mulations, have  been  set  apart  and  kept  separate  from  all  other  funds,  and 
dedicated  exclusively  to  the  payment  of  the  accruing  interest  and  final  re- 
demption of  the  principal  of  loans  made  and  to  be  made  by  the  State,  for  in- 
ternal improvement,  and  for  that  purpose  have  been,  as  required  by  the  act 
of  1837,  passed  into  the  Sinking  Fund. 

That  the  Sinking  Fund  has  met  the  expectations  of  its  most  sanguine 
friends  and  supporters — the  more  especially  when  its  limited  and  precarious 
resources  are  taken  into  consideration — cannot  be  doubted,  for  a single  mo- 
riient,  by  the  committee.  It  has  paid  all  the  accruing  interest  charged 
against  it  up  to  1st  of  January  last,  including  the  semi-annual  payments  on 
that  day. 

It  has  from  time  to  time  invested  surpluses,  to  the  amount  of  $343,356  40. 

The  semi-annual  dividends  due  from  the  Bank  of  Kentucky  to  said  Fund 
on  1st  January  last,  estimated  at  the  rate  of  eight  per  centum  per  annum, 
and  amounting,  by  that  estimate,  to  $52,956,  were  not  then  paid  over  for 
re-investment ; but  which,  when  re-invested  as  principal,  and  added  to  the 
foregoing  investment  of  $343,356  40,  will  make  an  aggregate  of  $395,952 
40 — the  same  being  the  total  increase,  by  way  of  investments,  up  to  the  1st 
January,  1840.  The  progress  of  accumulation  by  compounding  interest 
semi-annually  on  this  fund  of  $395,952  40,  is  shown  in  the  following  table, 


34 


and  demonstrates  its  ability,  at  six  per  cent,  to  redeem  all  the  bonds  sold 
for  internal  improvement  up  to  that  day,  as  fast  as  said  bonds  reach  ma- 
turity : 

A statement  showing  the  value  of  $400,000,  out  at  an  interest  of  six  per 
centum  per  annum,  the  interest  re-invested  every  six  months  . 


Principal, 

End  of  i year, 
“ 1 do. 

“ li  do. 

2 do. 

“ 2i  do. 

*•  3 do. 

“ 3i  do. 

4 do. 

“ 4i  do. 

‘‘  5 do. 

“ 5i  do. 

6 do. 

“ 6i  do. 

“ 7 do. 

“ 7^  do. 

“ 8 do. 

“ do. 

“ 9 do. 

“ 9i  do. 

10  do. 

“ m do. 

‘‘  11  do. 

“ lU  do. 

12  do. 

“ 12i  do. 

“ 13  do. 

“ 13i  do. 

“ 14  do. 

« Ui  do. 

“ 1.5  do. 

15i  do. 

“ 16  do. 

“ 16i  do. 

“ 17  do. 

“ 17d  do. 


. $400,000  00 
. 412,000  00 

• 424,360  00 

. 437,090  80 

. 450,203  60 

• 463,709  60 

. 477,620  80 

. 491,949  60 
. 506,708  00 

• 521,909  20 

. 537,566  40 

. 553,693  60 

. 570,304  40 

. 587,414  60 

. 605,036  00 

. 623,186  80 

. 641,882  40 

. 661,139  20 

. 680,973  20 

. 701,402  40 

. 722,444  40 

. 744,118  00 

. 766,441  20 

. 789,434  80 

. 813,117  60 

. 837,511  20 

. 862,624  40 

. 888,515  60 

. 915,171  20 

. 942,626  40 

. 970,904  80 
. 1,000,032  00 
. 1,030,033  20 
. 1,060,934  00 
. 1,092,762  00 
. 1,125,544  80 


End  of  18  years. 


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$1,159,311  20 
1,193,090  80 
1,229,913  20 
1,266,810  00 
1,304,814  20 
1,343,959  60 
1,384,242  40 
1,425,806  80 
1,468,580  80 
1,512,638  40 
1,558,017  60 
1,604,758  40 
1,652,900  80 
1,702,487  60 
1,753,562  40 
1,806,169  20 
1,860,354  40 

1.916.164  80 
1,973,650  00 
2,032,859  60 
2,093,845  20 
2,156,660  40 
2,221,360  40 
2,288,001  20 
2,.356,641  20* 
2,427,340  40 
2,500,160  80 

2.575.165  60 
2,652,420  40 
2,731,993  20 
2,813,952  80 
2,898,371  60 
2,985,322  80 
3,074,822  40 
3,167,128  80 


The  following  tables  show  the  calculations  upon  various  sums  for  different 
periods  of  time,  demonstrating  the  accumulative  capacity  of  a well  organ- 
ized and  prudently  conducted  Sinking  Fund. 


semi-annually. 


At  6 per  cent. 

At  7 percent. 

per  annum. 

per  annum. 

For  a period  of  five  years, 

$537,566 

$564,236 

For  a period  of  ten  years, 

722,444 

795,904 

For  a period  of  fifteen  years, 

970,904 

1,122,692 

For  a period  of  twenty  years. 

1,304,814 

1,583,652 

For  a period  of  twenty  five  years. 

1,753,562 

2,233,880 

For  a period  of  thirty  years. 

2,356,641 

3,167,128 

3,151,084 

For  a period  of  thirty  five  years, 

4,444,880 

A statement^  showing  the  value  of  $350,000  placed  at  compound  iniertsi  oj 
six  and  seven  per  centum  per  annum,  for  periods  of  Jive,  ten,  fifteen, 
twenty,  twenty  jive,  thirty  and  thirty  Jive  years — the  interest  re-invested 
semi-annually. 


At  six  per  cent, 
per  annum. 

At  7 per  cent. 
[)er  annum. 

For  a period  of  five  years,  ....... 

$470,371 

494,707 

For  a period  of  ten  years,  ....... 

632,139 

696,416 

For  a period  of  fifteen  years,  ....... 

849,666 

982,356 

For  a period  of  twenty  years,  ...... 

1,141,713 

1,385,696 

For  a period  of  twenty  five  years,  ...... 

1,534,367 

1,954,645 

For  a period  of  thirty  years,  ...... 

2,062,061 

2,763,199 

For  a period  of  thirty  five  years,  ...... 

2,771,237 

3,889,270 

Prior  to  January  last,  the  sales  of  bonds  for  internal  improvement  purpo- 
ses, were  as  follow : 

Of  bonds  bearing  an  interest  of  five  per  cent.  - - $1,365,000  00 

Of  bonds  bearing  an  interest  of  six  per  cent.  - - 1,315,500  00 

Total, - 2,680,500  00 


This  is  the  total  amount  of  State  bonds  for  internal  improvement  up  to 
that  date,  and  the  semi-annual  revenue  of  the  Sinking  Fund,  including  its 
dividends  upon  Bank  stock,  is  sufficient  to  pay  the  interest  on  that  sum,  and 
I’edeem  the  principal  at  maturity.  In  other  words,  the  Sinking  Pund  has  a 
semi-annual  income  sufficient  to  pay  the  gales  of  interest  charged  upon  it, 
and  has  already  invested  in  stocks,  a sum  which,  if  kept  at  work  at  six  per 
cent,  interest,  will  pay  the  principal ; and  it  follows  as  a consequence,  that 
the  whole  of  the  internal  improvements  now  made  and  completed,  are  a clear 
profit  to  the  State — at  all  events,  a clear  saving  to  that  amount.  To  illus- 
trate still  further : the  State  has  completed,  according  to  the  Governors 
message,  467  miles  of  turnpike  road,  and  247  miles  of  slackwater  navigation, 
and  has  provided  for  the  payment  of  principal  and  interest,  without  taxation. 

There  is,  however,  a quantity  of  unfinished  work,  a part  of  which  has 
been  paid  for,  and  a part  unpaid,  to  the  amount  of  about  $850,000 ; which 
work  is  supposed  to  be  a fair  equivalent  for  the  outlays  upon  it. 

The  committee  conclude  they  have  shown,  so  far  as  reliance  can  be  placed 
upon  human  agency,  that  the  investments  of  the  Sinking  Fund  are  adequate 
to  the  final  redemption  of  the  internal  improvement  debt,  being  sufficient  to 
pay  the  State  bonds  for  that  purpose,  as  they  come  to  maturity  ; and  that 
its  semi-annual  income  will  pay  the  interest.  And  they  beg  leave,  in  order 
to  give  the  House  a full  and  clear  view  of  the  subject,  to  state  briefly  the 
true  condition  of  the  State  debts,  and  its  total  indebtedness  on  its  bonds  or 
scrip. 

The  State  owes  the  Bank  of  Kentucky  and  the  Northern  Bank  of  Ken- 
tucky, one  million  each,  for  which  she  has  given  her  bonds,  bearing  five  per 
cent,  interest ; and  those  Banks  owe  the  State,  each  one  million,  for  Bank 
stock,  paid  for  with  said  five  per  cent,  bonds.  The  dividends  on  the  Bank 
stock  owned  by  the  State,  pay  the  interest  on  the  bonds  given  for  said  stock, 


and  have  left  a fraction  over  three  per  cent,  as  annual  dividends  to  the  State, 
declared  semi-annually.  Hence  the  State  is  ready  at  any  moment,  to  liqui- 
date those  two  millions.  In  truth,  the  transaction  is  not  a debt,  but  a source 
of  income. 

The  State  received,  as  before  set  forth,  $1,433,757  38  of  surplus  revenue, 
which  sum  is  safely  invested,  and  ready  to  be  re-paid  to  the  National  Trea- 
sury, if  called  for.  But  as  the  money  will  never  be  reclaimed,  the  commit- 
tee will  place  it  at  an  equation.  The  assets  of  the  State  are  therefore  equal 
to  its  liabilities  ; and  this  is  probably  as  much  or  more  than  can  be  said  by 
any  other  State  in  the  Union,  engaged  in  making  internal  improvements ; 
especially  as  the  improvements  already  made  are  a clear  profit  to  the  State, 
as  before  stated. 

A question  seems  to  have  sprung  up  suddenly  in  Europe,  that  the  States 
are  not  bound  to  pay  the  loans  obtained  by  them  for  State  purposes ; or,  in 
other  words,  the  States  are  not  bound  to  perform  their  engagements.  How 
an  opinion  so  obviously  at  war  with  the  first  principles  of  common  honesty, 
as  well  as  the  obligation  of  contracts,  could  have  originated,  is  perhaps  of  lit- 
tle consequence.  The  idea  is  too  absurd  for  serious  refutation,  and  is  men- 
tioned only  to  be  rebuked  and  repudiated.  Such  a notion — for  it  is  a mere 
notion — ^Jesuitical,  most  surely — may  have  been  mooted  on  ’change  in  New 
York  or  London,  for  stock-jobbing  purposes  ; but  no  statesman  of  reputation 
would  venture  to  maintain  a pretension  at  once  so  untenable  and  so  dis- 
graceful. The  State  of  Kentucky  has  considered  its  engagements  to  pay  the 
loans,  and  in  the  meantime  the  interest  thereon,  as  amongst  its  first  and 
most  sacred  duties  ; and  it  has  accordingly  made  sufficient  investments  to 
redeem  the  principal  of  its  loans,  as  well  as  to  pay  the  semi-annual  gales  of 
interest.  And  so  strictly  has  the  State  adhered  to  good  faith  in  this  matter, 
that  during  the  suspension  of  1837,  the  interest  was  paid  in  specie,  or  its 
equivalent,  at  New  York ; and  the  same  has  been  done  during  the  present 
suspension. 

In  conclusion,  the  committee  would  hold  themselves  but  faithless  sentinels 
over  the  public  faith,  were  they  not  to  enter  their  united  and  stern  protest 
against  the  impostion  of  further  burdens  upon  the  Sinking  Fund,  unless 
simultaneously  therewith,  means  ample,  certain  and  unquestioned,  should  be 
added  to  its  resources.  This  distinct  and  direct  avowal,  the  committee  owe 
to  themselves — to  the  house — to  the  public — to  the  world.  The  committee 
is  rendering  only  sheer  justice  to  Kentucky,  in  avowing  their  opinion,  that 
whilst  the  people  of  the  State  might  censure  their  representatives  for  impro- 
vident or  prodigal  expenditures  of  the  public  money,  they  would  overlook 
the  error,  and  forgive  the  wrong ; but  for  a loss  of  the  pledged  faith  of  the 
State,  they  would  neither  forget  the  offience,  or  pardon  the  culprit. 

J.  SPEED  SMITH, 

Chairman  Committee  on  Sinking  Fund, 


